Class Action and CBP’s Hold Harmless and Release Agreement

CBP's Hold Harmless and Release Agreement Form

An interesting cash seizure issue has been percolating across the Internet that arises from the class action (lawsuit) filed by a Texas nurse who is originally from Nigeria, though now a U.S. Citizen. As I understand it (after briefly skimming the complaint), she attempted to leave the country with around $40,000. She did not report the money to CBP as required, and so the money was seized for a failure to report.

What happened after her cash was seized?

Upon receiving the notice of seizure, instead of filing a petition she filed a claim. This is generally not the best way to get money back. When a claim is filed, you request the government to start judicial forfeiture proceedings, rather than administrative. I am greatly simplifying the process but, basically, when a claim is filed a judge will hear the case and eventually, some day, theoretically, you will have a trial by judge or jury about whether or not you can get seized money back. If a petition is filed, you instead are asking CBP to decide the matter internally without putting it before a judge.

Did the government file a complaint for forfeiture?

In this case, because she filed a claim the U.S. attorney had the discretion to decide whether or not they would pursue judicial forfeiture, or not. As luck would have it, the U.S. attorney declined by not filing a complaint for forfeiture. The way the plaintiff’s attorneys read the law (which so far, I agree with), this means CBP must return the money, immediately. Instead of doing that, CBP asked her to sign a hold harmless and release agreement that gave up her right to sue the government for seizure, and anything incidental (interest, emotional distress, etc.).

She refused to sign the hold harmless and release agreement, and CBP refused to return the money. Now she is suing the government for a whole host of things, including for a return of the cash. I don’t blame her for standing on principle; but she must not need the money terribly bad to tie this up in the courts.

What will the effect of this case be?

This case is very interesting, and raises a number of questions; first and foremost is, why did the U.S. attorney’s office not file a complaint for forfeiture once the claim was filed? I think they did not realize that once a claim is filed and a complaint for forfeiture is not filed timely, the property must be returned. In other words, someone at the U.S. attorney’s office did not realize the full consequences of what they were doing and probably believed that administrative forfeiture proceedings may still go forward.

Secondly, perhaps there were staffing issues (i.e., not enough personnel) that prevented the U.S. attorney’s office from wanting to handle judicial forfeiture proceedings, so they put it off.

In my experience, cash seizures at George Bush Intercontinental Airport are pretty infrequent compared with other ports. There might not be a lot of push to process these cases, especially so in Texas. With drugs and other contraband pouring across the border, why spend time seizing money likely to be from legitimate sources? They have better places to direct their resources then pretty obviously legitimately derived money.

What does this mean for people who have their cash seized?

This case, no matter the outcome, probably has little meaning for people who have had their cash seized. First, anytime a client of mine has filed a claim seeking judicial forfeiture, the U.S. attorney’s office has fought the forfeiture, usually tooth-and-nail. I have no reason to believe that this will result in less cash seizures nationally. I also do not believe this reflects a desire by the government to avoid judicial forfeiture if a claim is filed. I think this is probably a very unique case. Therefore, I see no reason to start filing claims instead of petitions in the hopes of getting back the money without a fight, and without proof of its source and use.

If this plaintiff wins her case, this will only mean that if a claim is filed and a case is not started by the government, you get the money back without having to sign a hold harmless and release agreement. I believe that this type of situation has very, very infrequently happened, and so the class number of people involved, although not insignificant, will be small.

Can she still be charged criminally for a failure to report cash?

Yes, this woman can still be charged criminally for a failure to report cash — she remains in that legal jeopardy. The failure to report transporting more than $10,000 in cash into or from the country is a criminal offense, and the government has 5 years from the date of seizure to charge her with this crime.

It does not matter that the money was legitimately derived or intended for legitimate uses, she still committed the crime of not reporting the cash; seizure is only one potential penalty, the others are arrest, fine, and imprisonment.

I suspect that the government is now weighing heavily the option of criminally charging the woman. I hope her attorney’s explained this risk to her. Maybe some things are worth waiting 5 years for.

In any event, I will be keeping a watchful on this case as it develops. Stay tuned for updates.